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In 10/27/2014 I invested in a 3-year Marketsafe World

Currency CD from Everbank. They...
In 10/27/2014 I invested in a 3-year Marketsafe World Currency CD from Everbank. They called it Marketsafe because you would not loose any of your principal investment in the CD. In the first 2 years of the investment the CD performed well; and I paid OID interest that was shown by the 1099-OID. However, during the last year the CD value fell below the original investment by the time the CD matured in 10/27/2017. Everbank did return my principal investment. I had zero profit from my CD investment. Everbank told me to check with my tax adviser in order to recover the OID interest payments I made for the past 2 years. This appears to be akin to the Federal Form 1040 line 30 entry but I am not sure. Bot***** *****ne; How do I go about getting back the OID interest payments I made for this CD in the past? Eberhard Haddad.***@******.***. Please let me know. Thanks.
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3/8/2018
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,354
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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The OID interest required to be recognized should be reflected as an increase in the investment while any actual payments received will be reflected as reductions. You add the interest amount to your original investment for the CD

While there is generally no secondary market for the CD's, if you enter into a sale, exchange, or other disposition transaction gain, will be recognized if the amount realized exceeds your adjusted basis in the CD. For you this was the maturity date.

This gain will be taxed as ordinary income similar to the OID. To the extent there is a loss on the transaction, such loss will be treated as an ordinary loss to the extent of previously recognized OID income inclusions and any excess will be treated as a capital loss.

In short you add the interest to the CD purchase price and report as a short term sale on form 8949. The interest then is shown as a loss.

It is very easy to be drawn to the guaranteed return of your initial investment but one of the major disadvantages is paying taxes on income that you have not yet received.

Please let me know if you need more information.
If not then please scroll up to see the STARS to rate so I am credited.

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Hello, just checking to see if you responded

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience: 15years with H & R Block. Divisional leader, Instructor
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